The journey undertaken by Nigeria's National Bureau of Statistics to update the country's national accounts compilation process was a long road to travel, but the destination was reached in Abuja on April 6.

The nearly two-year process was aimed not only at updating the national accounts compilation process but also at changing the base year (1990) to a more recent year, in a process popularly referred to as "GDP (gross domestic product) rebasing".

Nigeria's statistician general, Dr Yemi Kale, announced that Nigeria's GDP for 2013 had been revised from 42.4-trillion naira to 80.2-trillion naira ($509-billion), making it Africa's largest economy and shifting it nine places upwards on the global ranking of nations, taking it from 33rd position to 26th.

Kale was quick to sound a note of caution, however, urging Nigerians not to get carried away by these results. He pointed out that "GDP growth is not synonymous with development.
In fact, developing countries have been known to have higher and faster GDP growth rates than developed countries. The fact that a country has a higher nominal GDP than another does not in itself suggest that one country is ‘more developed' than another, since development encompasses a broader set of measures of human progress than GDP, which is strictly a measure of economic output."

That said, the rebasing of Nigeria's economy was long overdue. For many years, varying estimates of the actual size of the economy have circulated in a void of credible data. The truth is that, although the new figures do not change many physical variables, they do give the Nigerian government better tools with which to tackle the challenges of developing the economy and fighting poverty. They also predict that, with a lot more businesses covered in the new survey, Nigeria should be able to boost its poor tax-to-GDP ratio of 12%.

An update in the survey frame compiled by the National Bureau of Statistics showed an upgrade in the size of the sample – from 83 733 to 851 628 establishments. In addition, the number of economic activities reported in the GDP computation framework increased to 46 compared with 33 in the previous series, taking in new entrants such as financial institutions, publishing, movies, sound recording and music production.

To be able to collate, understand and interpret data correctly, as well as identify key areas in the economy is important. It means Nigerian policymakers and analysts get a more accurate set of economic statistics, numbers that are a truer reflection of current realities. A startling reality is the wide inequality gap shown by the revised Nigerian GDP-per-capita figure of $2 994. As World Bank country director Marie Françoise Marie-Nelly was quoted as saying, it shows that about 100-million people (out of Nigeria's more than 170-million) live in destitution or extreme poverty – on less than $1.25 a day.

This poses a huge challenge for the Nigerian government. This is the most populous country in Africa and the 10th most populous in the world, and its population is growing at an average of 2.8% year on year. Nigeria also has a huge unemployment rate – 29% – and must begin to step up its job creation efforts aggressively.

On the macro level, however, the National Bureau of Statistics said that real GDP growth, post-rebasing, was now estimated at 5.09% in 2011, 6.66% in 2012, and 7.41% in 2013. This revision suggests that, by the old estimates, Nigeria had actually been growing at a 14% average over the past three years. The services sector, post-rebasing, recorded an incredible average of 8.7% to GDP, and is expected to increase by an average of 7.72% year on year.

From here onwards, perception becomes vital. Nigeria has a 170-million-strong market, which means that investors may now look for greater opportunities there, potentially at the cost of other countries, including South Africa.

But this will not necessarily translate into greater financial inflows in terms of actual, long-term foreign direct investment – unless the new giant of Africa can match its new size with complementary policies and a massive campaign to narrow its infrastructure deficit. In addition, the country may need to step up banking reform to enable banks to support the revised size of the economy.

Studies show that Nigeria's top nine banks, as featured in the Banker's top global 1 000 banks, had a combined tier-one capital of $11.332-billion in 2011. This is lower than the $12.06-billion capitalisation of the Standard Bank Group of South Africa. International audit firm KPMG estimated that the Nigerian banking sector would be worth more than $168-billion by 2015, up from $117-billion in 2011. This would still be less than 23% of Nigeria's current GDP, so more work would need to be done.

In addition, when compared in terms of market capitalisation, the JSE, at more than $800-billion, is almost 15 times the size of the Nigerian Stock Exchange, at a paltry $54-billion. The combined market capitalisation of listed companies on the South African stock exchange is 250% of the country's GDP, which looks gargantuan compared with Nigeria's 10%.

The word on the street is that Nigeria's new economic position is a fluke. Many pundits will be keeping a close eye on how the Nigerian government responds – can it consolidate its new continental position? This is a challenge for Nigeria: Can it lead the continent into one of its most prosperous eras in the past 400 years?

Oluwatunji Andrews is a business and human resources consultant based in Nigeria